Using an electronic banking or card to pay corporation tax can be a convenient way of doing it. However, if you haven’t had any experience with the process, you might be wondering what you need to do. Here are some tips to help you out.
what is corporation tax?
Generally speaking, a corporation tax is a type of income tax paid by a limited company. The tax is calculated on the profits of a company during the financial year. Currently, the corporation tax rate in the UK is 19%. However, this may change in the future.
The rate of corporation tax is set by the government. This may vary from year to year. The due date for payment of corporation tax is 9 months and one day after the company’s year end for companies with corporation tax liability of less than £1.5M.
If the taxes are not paid in time, the corporation will be charged interest.
What you need to pay corporation tax
You will require your company’s corporation tax Accounts Office reference number in order to pay the corporation tax. This reference number is 17 digits long and is made-up of the company’s unique tax reference and the tax year to which the corporation tax relates to.
You will also require your company’s credit or debit card if you are paying by phone or through HMRC online payment portal. If you are paying over the counter at a bank or through your bank’s online payment system, you will also require HMRC account number and sort code which can be found on the back of the “notice to pay corporation tax” issued to your company by HMRC.
How to find your company’s corporation tax payment reference number
A company’s corporation tax payment reference number can be found in three ways.
1. In the company’s HMRC online account if the company has a HMRC account.
2. On the notice to file a corporation tax return normally issued by HMRC to a limited company soon after the tax year end.
3. On the notice to pay corporation tax normally issued by HMRC to a limited company soon after the company submits its accounts and corporation tax computation to HMRC.
In the unlikely event that the Companies corporation tax account reference cannot be found, a director of the company can call HMRC and request for a copy of the notice to pay corporation tax to be recent to the company.
The different ways to pay corporation tax liability
A company can pay it’s corporation tax liability using a number of different ways. The following methods are generally used.
1. Through HMRC online payment gateway.
A company can pay its corporation tax liability through HMRC online payment gateway using a debit or credit card.
Using this method can be a little confusing when using it for the first time. However, once used a few times it does become easier and a much-preferred method. To use this method, all that is required besides your debit or credit card is the company’s 17 digit corporation tax payment reference number.
2. Pay corporation tax through telephone banking.
Using this method is simple. However, it is worth pointing out that not everyone can use this method due to the restriction most banks put on the amounts that their customers can pay via telephone banking.
If the corporation tax that you are paying is large, it would be advisable to check with your bank that it does not exceed the maximum that can be paid through telephone banking. To make payment by telephone, you need the corporation Tax Account reference number, the sort code and account number of HMRC together with your bank’s telephone banking security details.
3. Pay Corporation tax using online banking.
If you have online banking setup with your bank, you can use it to pay your company’s corporation tax liability. As with other methods above, you are going to need your company’s 17 digit corporation tax payment reference number and any other information that is specific to your bank. You also need HMRC bank details and sort code shown on the notice to pay corporation tax.
4. Through any high street branch of your bank.
It is also possible to pay your company’s corporation tax liability through any High Street branch of your bank. The exact manner in which this method can be applied will depend on how your bank accepts payments through their high street branch.
In recent times, a lot has changed when it comes to how banks deal with their customers through their High Street branches. This is borne out of the determination by all the High Street banks to automate as much of the processes of their High Street branches as they can. Consequently, the process of paying your corporation tax liability through a High Street branch of your bank will differ from one bank to another.